Abu Dhabi investment fund buys 1.85% Jio Platforms stake

Reliance Industries have found a fifth investor to purchase a handsome stake in Jio Platforms, its digital business unit, with Mubadala signing a $1.2 billion cheque for 1.85%.

Confirmed via Twitter, Khaled Abdulla Al Qubaisi, CEO of the Aerospace, Renewables and ICT portfolios for Mubadala, revealed the $1.2 billion investment will make the firm a stake holder in Jio Platforms, the holding company of disruptive telco Reliance Jio and numerous other digital ventures. “This investment is in line with our current ICT strategy and complements our portfolio of investments in telecoms, satellite operations, data centres and other ICT infrastructure,” Al Qubaisi said.

For Reliance Industries, it certainly caps off a successful seven weeks, though who knows whether there are other irons in the fire.

Jio Platform investments since April 22, 2020
Partner Stake Investment Date
Mubadala 1.85% $1.2 billion 4 June
General Atlantic 1.34% $860 million 18 May
Vista Equity Partner 2.32% $1.5 billion 11 May
Silver Lake 1.15% $750 million 4 May
Facebook 9.9% $5.7 billion 22 April
Total 16.56% $10.01 billion

As you can see from the table above, it certainly has been a profitable couple of weeks for the Reliance Industries MD Mukesh Ambani. Aside from the additional cash which is being invested into the business to continue network deployment and upgrades, there are some interesting synergies.

Facebook, for example, offers interesting opportunities to work with SMEs in the emerging cashless economy. General Atlantic already invests in Doctolib, digital healthcare platform in Europe to connect health professionals and patients. Mubadala is the same.

One of the Mubadala investments happens to be Yahsat, a satellite company which offers voice and data coverage across 161 countries. Not only could this company assist Jio by improving the connectivity patchwork in India, it is also an interesting partner to have in the mix for international roaming.

Each of these investors have expertise and investments which would be of interest to the Jio connectivity mission, or the second wave of monetization which follows the democratisation of the mobile internet.

4G subscriptions in India (2015-21), thousands
Year Bharti Airtel Vodafone Idea Reliance Jio Other Total
2015 1,459 21* 77 1,557
2016 10,800 9,541* 72,000 3,700 95,150
2017 30,000 36,998* 160,091 22,466 242,130
2018 77,067 75,300 280,100 22 433,061
2019 127,345 104,200 370,000 604,745
2020 180,491 105,062 406,978 702,686
2021 219,718 110,344 403,310 754,803

*For simplicity, Vodafone India and Idea Cellular subscriptions have been bundled together

Source: Omdia World Information Series

The table above offers a lot of information, but there are a few very important points which we would like to draw attention to.

Firstly, the total number of 4G subscriptions in India. At 754 million, there is still plenty of headroom for growth in a country where the population exceeds 1.3 billion. Secondly, the Reliance Jio disruption dragged the India market through a digital revolution from 2016 onwards. And third, Reliance Jio has a much greater opportunity to diversify revenues through digital services as it has more 4G subscriptions than its rivals.

When you look at the subscriptions data for all mobile technologies, adding everything from 1G through to 5G, the market share battle looks a lot more flattering for Bharti Airtel and Vodafone Idea, but it is a misleading picture. We are focusing on the 4G subscriptions as there is much more potential for additional revenues from this generation of mobile connectivity.

The blunt force object approach to telecoms is selling more subscriptions at an attractive price. Reliance Jio is clearly better at this than rivals, and there is more opportunity to sell 4G contracts in India. This will make Reliance an interesting investment, but the more savvy investors will look at everything this connectivity enables.

Through Jio Platforms, Reliance Industries has launched ventures into digital entertainment, AI, enterprise connectivity, IOT and many others. Democratising connectivity is an entry point to build a second wave of businesses as more of India is brought into the digital economy. These additional investments could be healthcare orientated, offering an alternative to traditional banking infrastructure or digitising government services. As the growth of Silicon Valley has shown, there is potential to make fortunes by leveraging connectivity.

This is why Jio Platforms is getting foreign investors excited. There is so much more to India’s digital economy than selling 4G subscriptions.

Amazon said to be considering $2 billion stake in Bharti Airtel

The strange big tech arms race in the Indian telecoms sector looks set to escalate further if Amazon buys a major stake in Bharti Airtel.

The rumour comes courtesy of Reuters, which has had a word with no less than three people who reckon they’re clued up on the situation. They say Amazon is in early-stage talks to buy a stake worth at least $2 billion in Indian mobile operator Bharti Airtel. That would apparently equate to around 5% of the company, although it seems Amazon could double that investment if it got a sudden rush of blood.

While the Indian telecoms market is arguably the number one growth opportunity in the global market, the operators left standing are all in a lot of debt. That, combined with the depressed value of assets thanks to the coronavirus-induced global recession means there are some great investment opportunities. Not only do they offer potential capital growth, having a piece of the action also grants access to billions of Indian punters.

Which explains why US internet giants are showing such an interest. In April Facebook chucked $5.7 billion at Reliance Jio and last week it was reported that Google is having a sniff around Vodafone Idea. While all this cash will doubtless come with major strings attached, this is probably good for the Indian telecoms sector as a whole as it should enable the operators concerned to accelerate their network rollout plans.

Google to face $5bn privacy lawsuit as consumer craving for secrecy increases

Law firm Boies Schiller Flexner has filed a $5 billion class action lawsuit against Google in the Northern District of California for continuing to collect data while privacy mode is activated.

Alleging Google violated the Federal Wiretap Act, the California Invasion of Privacy Act and the Fourth Amendment, the law firm is suing on behalf of millions. Although $5 billion is a significant financial penalty to be fearful of, Google should perhaps be more worried of precedent as losing this case could open the door for other lawsuits in States with their own privacy laws.

The ruling of this lawsuit will boil down to one question; did Google illegally mislead users by overstating the privacy protection afforded when users activated ‘Incognito’, a mode which supposedly acts as an opt-out for data collection and analysis.

“Google tracks and collects consumer browsing history and other web activity data no matter what safeguards consumers undertake to protect their data privacy,” the lawsuit states.

“Indeed, even when Google users launch a web browser with ‘private browsing mode’ activated (as Google recommends to users wishing to browse the web privately), Google nevertheless tracks the users’ browsing data and other identifying information.”

Should the lawsuit be successful, the team would like to award $5,000 in damages to every user who has used Google’s ‘Incognito’ mode since June 1, 2016.


‘Incognito’ mode was first introduced to Google search functions in 2008 and is designed to allow users to browse the internet without Google Chrome remembering the activities. Although it sounds promising, what should be noted is that Google has always stated it is not an absolute protection from online tracking.

The following statement is taken from the Google ‘Incognito’ section of the website:

Chrome won’t save your browsing history, cookies and site data, or information entered in forms. Files you download and bookmarks you create will be kept. Your activity isn’t hidden from websites you visit, your employer or school, or your internet service provider.

The contentious issue is how much ‘Incognito’ mode was oversold to the user, with the Boies Schiller Flexner legal team believing Google misled users. Through applications and functions such as Google Ad Manager and Google Sign-In, the claim is that browsing information was still collected by the search giant despite assurances to the user it wouldn’t.

Of course, what is worth noting is that there is serious incentive for the collection of personal information. According to estimates (albeit, old estimates) from Tim Morey of digital strategy firm Frog, the value of different data segment vary quite significantly:

  • $240 – Social security number
  • $150 – Credit card information
  • $57 – Internet browsing history
  • $38 – Health history
  • $5.7 – Online purchasing history
  • $4.2 – Contact information

The question which is being asked today is whether all of these data collection and analysis strategies are being done legally.


One trend which is becoming increasingly more obvious is the desire for more privacy.

Earlier this week, Brave, a privacy-orientated search engine, said that monthly active users (MAUs) passed 15 million for the first time in May, a 125% increase year-on-year. These browsers also tend to be more engaged, with click-through rates of ads were as high as 9%.

Perhaps it is the dangers of the digital economy hitting home, finally, but users are becoming much more aware of their privacy rights. This is not good for business for the likes of Google and other internet giants where business models are moulded around information, but it does raise a few questions about the suitability of existing privacy laws:

Telecoms.com Poll – Should privacy rules be re-evaluated in light of a new type of society?
30% Yes, the digital economy requires a difference stance on privacy
41% The user should be given more choice to create own privacy rights
29% No, technology has changed but privacy principles are the same

One question which has not been properly addressed is whether the privacy rules which are being enforced today are suitable for the digital era?

The EU’s General Data Protection Regulations (GDPR) were passed in 2018, ensuring rules in Europe were fit for purpose, but many countries are dictated by privacy rules and regulations written in a bygone era.

In this lawsuit against Google, the three laws mentioned could certainly be considered out of date:

  • The Federal Wiretap Act was actually written in 1968 and largely replaced by the Electronic Communications Privacy Act of 1986
  • California’s Invasion of Privacy Act was first legislated in 1967, though there have been numerous updates, including the California Consumer Privacy Act in 2018
  • The Fourth Amendment was written in 1789 to protect the rights of citizens and prevent warrantless searches of their homes

Although all of these laws are theoretically in the same ballpark, they have been designed for analogue societies. Legal documents are full of nuances and loopholes and taking an example slightly out of context can create all sorts of problems. Today’s digital society is fundamentally different from the analogue era, making it difficult to apply existing laws perfectly.

A donkey might have four legs, a tail and eat hay, but that does not mean it will be at home in the starting gate at a racecourse.


There are plenty of ways the lawsuit against Google can fall apart, most notably as the lawyers on the offensive will have to demonstrate an extensive knowledge of the intricate operations within the search engine business to prove their points. This is an issue.

What you can also guarantee is that Google will throw plenty of legal resources at the case. These are seasoned professionals who have become very well accustomed to defending the internet giant.

Google will of course not want to pay the $5 billion penalty which is being sought by the lawyers championing this class action suit, a bigger consequence is precedent. If lawyers are successful in suing Google for breaking California laws, who is to say another firm would not raise the alarm in any one of the other 49 States which make up the USA.

The USA is a highly litigious country and precedent is a very powerful force in this community.

2020 will see a video conferencing profit boom, but it could be short-lived

Zoom might be riding a high for the moment, but unless it starts to add additional value into its products it will soon wither away to the realms of irrelevance.

Yesterday, June 2, Zoom announced its financial results for the three-month period ending April 30. Total revenues increased by 169% year-on-year, while the management team boasted of more than 265,000 customers with more than 10 employees, up 354% year-on-year.

The coronavirus pandemic has certainly been profitable for the video conferencing firm.

“We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1,” said CEO Eric Yuan. “The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives.”

For some companies, the rapid shift in working behaviour has been a welcome change, and while some of these trends will remain permanent, what remains to be seen is whether the profits will be.

Telecoms.com Poll – Do you think your business will continue the current work from home dynamic once the coronavirus pandemic has passed?
34% Yes, we’ll be given the option to work as we please
25% Yes, but we’ll have to check into the office occasionally
4% No, but others job functions in the company will
6% No, can’t do my job properly unless in the office
6% No, my company is still not convinced by remote working

What has been made quite clear over the last few weeks is that the remote working dynamic will at least partly be embraced. The digital transformation programme companies have been strong-armed through has proven successful, economies have not ground to a halt through COVID-19, and even the most traditional (dated) managers would have to keep some of the new working practices.

Admittedly this is a small poll, but Gartner supports the outcome, suggesting that while 60% of meetings take place in-person today, this could drop to as little as 25% in 2024.

Employees are happier, productivity has been maintained and cost-savings can be realised with a more mobile workforce. What is there not to like?

But the question some suppliers will ask is how much money can be made in the future?

According to Gartner unified communications (UC) research, overall spending on video conferencing software will increase 24.3% in 2020. This is the second-fastest growing category in the UC market, only behind cloud-based telephony. Both of these surges can be easily explained by the coronavirus pandemic.

Worryingly for companies like Zoom, this growth is forecast to taper off in 2021, while are suspicions that cloud expenditure could be rationalised over the mid-term, effectively penalising niche suppliers who do not offer a portfolio of services.

When we spoke to Nick McQuire of CCS Insight, he highlighted that while increased cloud spend might be sustainable post-COVID-19 as mobility trends are embraced, there are likely to be rationalisation projects on the horizon. As many of the decisions made to enable remote working were likely to have been knee-jerk reactions, overlap within organisations could exist or decisions might have been poor ones.

These rationalisation programmes could manifest in numerous different ways. Centralised procurement could mean single suppliers are selected, contracts could be ended as better options are found, or free services could be bundled into existing commercial contracts as value adds.

The final possibility is one which should be feared by all nice software providers who specialise in single areas. Best in breed suppliers could be sacrificed at the altar of financial efficiency. You have to consider what is out there currently.

Zoom is a video conferencing service, with plans to offer a cloud-telephony service in addition, however it offers little else. Other companies will offer the same services, perhaps not as high a quality, but as long as a satisfactory experience is achievable this is a palatable concession for a bundled contract.

Google, for instance, has made its video conferencing services free for all. This is temporary, but it could be made free for corporate customers in the future bundled into a contract which also includes desktop virtualisation, cloud storage, data analytics and numerous other elements. Bundled contracts are generally cheaper for the customer, and Google would most likely be very accommodating.

GoToMeeting is another niche player in the video conferencing world, though it is part of the LogMeIn group which also offers desktop virtualisation and user authentication services. This is not as broad as a supplier like Google, but there is an opportunity to bundle. Another example of a niche service is BlueJeans, however this was recently acquired by Verizon and will certainly be bundled into larger connectivity contracts for enterprise customers.

During the recent earnings call, Zoom CEO Eric Yuan said the business would continue to be ‘laser-focused’ on video and phone service, though competition should be welcomed to encourage innovation. Being the best in one area and little else is fine in a perfect scenario, but the world is very rarely in such a state. Decision makers will state that they will search for best in breed, but sometimes concessions have to be made. Budgets do exist after all and the ultimate objective is to make money.

This is the risk that niche providers will face. They could be muscled out of the market as enterprise decision makers elect for more cost-effective bundled service offerings. Such thinking would benefit the tech giants, but with a recession on the horizon it might be a trend we’ll have to get used to.

Google Cloud signs valuable procurement deal with UK Government

Google Cloud has signed a Memorandum of Understanding with UK Crown Commercial Service, a step towards developing a supplier relationship with public sector organisations in the country.

While there might be some UK public sector organisations out there already working with the Google Cloud team, signing a deal with the Crown Commercial Service (CCS) could be considered a seal of approval from a higher bureaucratic power. It’s a valuable credibility badge to have when attempted to secure additional business from public sector customers.

“CCS provides commercial agreements which help organisations across the entire public sector save time and money on buying everyday goods and services,” said Simon Tse, Chief Executive of CCS.

“This MoU with Google Cloud unlocks large-scale business benefits for our customers and demonstrates CCS’s role in helping the public sector serve UK citizens in more innovative ways.”

While the MOU incorporates all services and products offered by the Google Cloud business, particular attention have been afforded to Anthos, a hybrid- and multi-cloud management tool. This is an interesting element of the announcement, as it allows Google to boast about its toolset to aid interoperability in an increasingly complex cloud environment.

This agreement might not seem anything more than a ribbon-cutting ceremony, but it could prove to be important. Theoretically, public sector organisations in the UK should aim to work companies which have been approved by or signed an MOU with CCS. The following is the organisation’s mission statement:

We’ve brought policy, advice and direct buying together in a single organisation to; make savings for customers in both central government and the wider public sector, achieve maximum value from every commercial relationship and improve the quality of service delivery for common goods and services across government

In a nutshell, the CCS is aiming to leverage the purchasing power of the UK public sector as a whole, negotiating discount rates and creating standardised contracts. Of course this will dynamic will not work perfectly, and there will be those who ignore the correct procedures, but it could be viewed as an edge over rivals.

Looking through the suppliers listed on the Digital Marketplace, it is an exhaustive list but there are some very big omissions. Google has made it, as has Oracle, perhaps owing to legacy business relationships, but Amazon Web Services and Microsoft do not feature.

If the world is to become more defined by cloud computing, the wrestling match to secure valuable contracts will require every advantage which is possibly available. This MOU with the CCS could certainly prove to be one for Google in its scrap with the other cloud segment leaders.

What is worth noting is that being listed on the Digital Marketplace as a supplier might not mean much. There are several Government departments and agencies offering very lucrative contracts to companies who are not listed.

The Driver & Vehicle Standards Agency (DVSA) and the Ministry of Justice are high-profile AWS customers, while Microsoft counts the Department for Education, the BBC and Kent County Council as its own. Microsoft Azure is also being used to power the UK’s controversial contact tracing app being used to track and combat COVID-19.

Interestingly enough, what this does demonstrate is Google’s success in monetizing its higher-value services on top of cloud computing basics.

Nick McQuire, of analyst firm CCS Insight, highlighted that Google Cloud does lag behind rivals AWS and Microsoft for UK cloud market share, being viewed as more of a ‘backup’ service provider in a multi-cloud market, but this could change.

“What we are seeing now however is the market shifting more rapidly to Google’s higher-level services on top of compute and storage such as its data, analytics, AI and it’s hybrid multi-cloud management offerings for Kubernetes in Anthos,” said McQuire.

“So, it’s no surprise this announcement reflects this trend. But above all, it highlights that the market is very much in a hybrid multi-cloud picture but no doubt the move is a big boost for Google in the government sector, a segment where we have seen AWS and Microsoft push more aggressively towards in the past.”

Whether this agreement is viewed as merely symbolic or not, it is perhaps evidence that Google is being considered more on level terms with its rivals. This is not to say public sector organisations will not be just as tempted to go with AWS or Microsoft, neither of whom are featured on the Digital Marketplace, but credibility is the first step toward profitability for Google. This is perhaps want this MOU is more than anything else.


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Ericsson’s having a good day, adding a 5G win with Bell Canada

Swedish kit vendor Ericsson has celebrated two 5G deal wins today, with the latest indicating it took some share from rivals Nokia and Huawei.

There isn’t much detail other than the fact that Ericsson will be one of the 5G RAN partners for Bell Canada. This apparently builds on their existing partnership, which included some 4G provision, but the canned quote from Niklas Heuveldop, Head of Ericsson North America, indicates the vendor may have a bit more of the action in this deal.

“We are proud to have earned Bell’s trust to be selected as one of their key partners and significantly expand our existing relationship to accelerate the transformation of their network with 5G mobile and fixed wireless technology,” said Heuveldop. “With our industry-leading 5G product portfolio, Bell will be able to provide Canadian consumers, enterprises and the public sector with innovative experiences and services whether they are on the move or at home, regardless if they are in urban or rural areas.”

“Bell’s 5G strategy supports our goal to advance how Canadians connect with each other and the world, and Ericsson’s innovative 5G network products and experience on the global stage will be key to our rollout of this game-changing mobile technology across Canada,” said Mirko Bibic, President and CEO of BCE and Bell Canada.

“Investment and scale in leading-edge networks is critical to national competitiveness, economic growth and resiliency, highlighted by the important role that Bell’s wireless, fibre and broadcast networks have played in Canada’s response to COVID-19. With the support of Ericsson and our other 5G partners, Bell looks forward to ensuring Canada remains at the forefront of the next generation of mobile communications.”

Earlier today we reported that Ericsson had scored some 5G core action with Telefónica Deutschland. Meanwhile the Wall Street Journal seems to have decided that Ericsson is the 5G leader, thanks in part to US victimization of Huawei. So on the whole it has been a pretty good day for Ericsson and we’d say the drinks are on them. Mine’s an aquavit, Börje.

Zynga spends $1.8bn to buy its way back into relevance

Zynga has announced the purchase of Turkish mobile games developer Peak for $1.8 billion, skyrocketing share price at a firm credited with being one of the first to break the mobile gaming sector.

Once upon a time, Zynga was a bright shining star, another exciting prospect to emerge from Silicon Valley. After raising almost $900 million from various funding rounds, the company registered itself on the NASDAQ during December 2011. Leaping more than 40% in the first few weeks to $12.93, Zynga looked like hot property, until it plummeted to $2.72 in the summer of 2013. The next six years were that of irrelevance and mediocrity.

With a poorly managed venture into real-money gaming and an inability to create blockbuster games, the business simply trundled along, though the purchase of Peak clearly excites the market, shooting up share price 25%.

“Peak is one of the world’s best puzzle game makers and we could not be more excited to add such creative and passionate talent to our company,” said Frank Gibeau, CEO of Zynga.

“With the addition of Toon Blast and Toy Blast, we are expanding our live services portfolio to eight forever franchises, meaningfully increasing our global audience base and adding to our exciting new game pipeline. As a combined team, we are well positioned to grow faster together.”

The difficulty with the mobile gaming industry is speed and sustainability. Firstly, because launching a game does not take much money, viral games can come from anywhere not just those companies with cash. Secondly, there is absolutely no guarantee a successful game will stay successful for very long.

In purchasing Peak, Zynga will bring Toon Blast and Toy Blast titles into its stable, two games will regularly feature at the top of download charts. How long this will continue is unknown, but in an ecosystem which is increasingly being defined by talent not cash, the 100 Peak employees will be a very valuable addition.

What is worth noting is that acquiring another business should not be viewed as a cure to the Zynga ills. This is the thirteenth acquisition, albeit the largest, since the business went public in 2011. Investors will hope it is thirteenth time lucky.

BT plays the green card

UK telco BT has a cunning plan for turning the business around… by reducing its carbon footprint.

For some reason the power that be at BT have decided the best way to bounce back from a global recession caused by a viral pandemic is to hug some trees. Specifically, it is launching a Green Tech Innovation Platform, which seems to be some kind of eco-focused incubator, and has joined forces with The Climate Group to launch a new partnership called The UK Electric Fleets Alliance, which will virtue-signal about electric vehicles.

“The economic setback and immense hardship caused by the Covid-19 pandemic are severe and could be long lasting,” said BT Chief Exec Philip Jansen. “However, despite the temporary reprieve on carbon emissions and air quality in towns and cities during the lockdown, the global climate emergency hasn’t gone away.

“As we emerge from the crisis, the recovery presents a huge opportunity for governments, businesses and individuals to put action on climate at the heart of their efforts. We will be playing our part with a once-in-a-generation investment in the UK’s digital infrastructure: full fibre broadband to 20 million premises, as well as our continued investment in 5G mobile. We will also be backing new green technologies through our Green Tech Innovation Platform. BT is stepping up on climate action and we want to encourage and help others to do the same.”

This gesture is clearly aimed at the Davos set, for whom teen green activist Greta Thunberg has become the person they all turn to for guidance. There is apparently significant corporate reputational capital to be gained from saying all the right things about carbon reduction and electric vehicles, despite the benefits of both still being keenly disputed. BT shareholders must be hoping, however, that Jansen has a view other tricks up his sleeve to arrest reverse the apparently terminal decline in its share price.

As MasMovil becomes latest acquisition target, are more takeovers on the horizon?

KKR, Cinven and Providence have combined forces to buy Spanish telco MasMovil, but with depressed share prices and regulatory opinions shifting, it could be the first of many corporate transactions.

The merger and acquisition landscape has been somewhat quiet over the last few months, since the COVID-19 pandemic set in across the world, but we struggle to believe there are not cash rich investment funds considering weighty purchases. The most successful investment funds are only such because they can sniff an opportunity, and this is exactly what the MasMovil acquisition should be viewed as; corporate opportunism.

There are still approvals needed from Banca de Espana, the Spanish Telecoms ministry and Industry & Commerce ministry (foreign investment approval), as well as competition authorities in the EU, China, Turkey, Serbia and Israel. However, we suspect the process will run smoothly, especially considering MasMovil CEO Meinrad Spenger has already said he would support the transaction.

First reported by Reuters, the trio of bankers have now made an official public tender offer for $3.3 billion, a 22% premium on the opening share price this morning (June 1). Share price has surged 20%, as one would expect, though it has only just crept above the pre-lockdown levels.

This is what is very interesting about the telco market currently; share price for all major and minor telcos is severely depressed. For those who have money available, and the desire to push into the telecoms space, it is a very attractive opportunity currently.

Share price of selected European telcos during COVID-19 lockdown period
Telco Share Price, June 1 Share Price, Feb 3 Change
BT 120.51 163.34 -26%
Telecom Italia 0.48 0.34 -29%
Telefonica 6.11 4.48 -26%
Telenor 17.75 15.02 -15%
Orange 12.80 10.98 -14%
Vodafone 150.82 134.86 -11%

Share prices accurate at the time of writing – 10.30am, June 1

Some of the companies mentioned above would be too big to consider to be an acquisition target, Orange or Telefonica for example, though others could certainly fall into the right bracket. BT has a market capitalisation of £11.9 billion and is underperforming against UK rivals considerably, while the likes of KPN in the Netherlands could be another interesting target. Sitting third in the mobile market share rankings in the Netherlands, a cash injection and refreshed strategy could be a worthwhile gamble with the telco’s market capitalisation currently €9.42 billion.

Of course what is also worth noting is that the opportunity for acquiring business is not just limited to the bankers. Thanks to a ruling from the European Court of Justice, telcos might have renewed enthusiasm for market consolidation.

Last week, the General Court of the European Court of Justice annulled a decision made in 2016 to block a merger between O2 and Three in the UK on the grounds of competition. In annulling this decision, it challenges the long-standing belief that mergers which would take a market from four operators to three would be vetoed automatically.

This decision is very important for those who have been championing market consolidation. Some argue fewer telcos would results in more concentrated network investment, as well as scaled economics thanks to larger customer bases. The decision from the European courts opens the door for potential market consolidation.

There are of course markets where consolidation is not realistic, the Netherlands or Belgium for example where there are only three mobile network operators (MNOs) today, but there are others where this could be an interesting development. Spain is certainly one of them.

The Spanish market is one where there is plenty of competition. There are currently four major mobile operators, albeit MasMovil is an MVNO, while Euskaltel announced plans to challenge the market with a Virgin Media branded proposition. KKR, Cinven and Providence want to take control of MasMovil, but might Orange be tempted to muscle in on the action?

Telco subscriptions in Spain (2018-2021)
Telco 2018 2019 2020 2021
Orange 19,450,963 19,016,941 19,783,330 19,890,931
Telefonica 18,384,400 18,916,801 19,579,529 20,040,114
Vodafone 15,500,832 15,427,639 15,262,546 15,406,460
MasMovil 6,760,000 7,435,000 7,513,777 7,952,289

Source: Omdia World Information Series

MasMovil could look attractive to Orange for several reasons. Firstly, this is a telco which is heading in the right direction, subscriptions are growing year-on-year. Secondly, MasMovil has bought into the convergence business model which is being championed by the Orange Group. And finally, MasMovil is a MVNO customer of Orange’s Spanish wholesale business, making integration a bit simpler.

With the European courts turning a new page on market consolidation, possibly indicating authorities might be more accommodating of such transactions, this could be an idea which is being discussed in the Orange offices. It would make sense for Orange’s ambitions in the country, while MasMovil is open to some sort of transaction.

Some might also suggest Telefonica would be interested, but with the management team desperate to reduce the €44 billion debt burden and its credit ratings not exactly sparkling, this is unlikely. Vodafone might have considered such a move at another time, but it has larger problems to tackle without adding the complications of an acquisition, most notably in India and Italy.

Speculation aside, KKR, Cinven and Providence will attempt to buy the Spanish challenger telco. With a depressed share price and appreciation for the importance of the telecoms industry at its highest levels, we would not be surprised if this is only the first of several transactions from investment funds, though telco consolidation is also another story worth keeping a close eye on.